Facts of the Case
The defendants, Roffey Bros, were main contractors for the refurbishment of 27 flats and subcontracted the carpentry work to the plaintiff, Lester Williams, for a lump sum of £20,000. After completing work on the roof and nine flats, Williams ran into financial difficulties because the initial price was too low to operate profitably and he had failed to supervise his workmen adequately. Roffey Bros were concerned because their main contract contained a “penalty clause” for late completion, and they knew Williams was struggling.
On 9 April 1986, the defendants held a meeting with Williams and proposed to pay him a “bonus” of an additional £10,300 (£575 per flat) to ensure he continued working and finished on time. Williams continued work and substantially completed eight more flats, but Roffey Bros only made one further payment of £1,500 before Williams ceased work. Williams sued for the promised additional payments.
The Move Away from the Strict Rule in Stilk v Myrick
The central legal hurdle was the 1809 rule in Stilk v Myrick, which established that a promise to perform a pre-existing contractual duty is not good consideration because the promisee provides nothing new in exchange. However, the Court of Appeal in Williams noted that Stilk was decided during the Napoleonic wars under “extraordinary conditions” where seafaring was hazardous. At that time, there were strong public policy grounds to protect ship masters from being “held to ransom” by crews who might refuse to work in mid-ocean unless promised extra pay.
The court argued that while the core principle of Stilk—that a gratuitous promise remains unenforceable—is still valid, it should be refined and limited for the modern era. Academic and judicial commentary suggests that the protection once provided by the rigid doctrine of consideration is now more effectively handled by the modern doctrine of economic duress.
Importance of the Lack of Duress and the Defendants’ Initiative
The most critical factor distinguishing Williams from Stilk was that the agreement was reached without any illegitimate pressure. The court emphasized that the initiative to pay more came entirely from the defendants, who realized that underpricing the subcontract was contrary to their own interests.
The relevant quote from the judgment of Purchas LJ highlights this significance:
“In the present case the question of duress does not arise. The initiative in coming to the agreement of 9 April came from Mr Cottrell [the defendants’ surveyor] and not from the plaintiff.”.
Because the company themselves suggested the overpayment to “secure their position commercially,” they could not later claim they were being coerced. This lack of duress allowed the court to look for “practical benefits” that could serve as consideration.
Key Legal Principles and Findings
The court established the “Practical Benefit” test, formulated by Glidewell LJ, which allows performance of an existing duty to count as consideration if:
- A is in a contract with B to provide goods or services.
- B has reason to doubt that A will complete their side of the bargain.
- B promises A an additional payment to ensure on-time performance.
- B obtains a practical benefit or obviates a disbenefit (e.g., avoiding a penalty clause or the expense of finding a new subcontractor).
- B’s promise is not given as a result of economic duress or fraud.
The court concluded that Roffey Bros received several practical benefits: they avoided the penalty clause, avoided the “trouble and expense” of engaging new carpenters, and replaced a “haphazard” payment method with a more formal system.
Academic Discussion and Implications
- Shifting Legal Focus: Commentators note that Williams shifts the law’s protection of promisors from the “lack of consideration” hurdle to the “economic duress” defence.
- “Practical” vs. “Legal” Benefit: The case is controversial because it prioritizes factual benefits over the traditional requirement of legal detriment. Critics like Colman J argue this violates the rule that consideration must move from the promisee, as Williams was only doing what he was already legally bound to do.
- The “Bird in the Hand” Rationale: Professor Chen-Wishart suggests the case can be viewed as a collateral unilateral contract: Roffey Bros promised to pay more if and when Williams actually performed, acknowledging that actual performance is often more valuable than a mere legal right to sue for breach.
- Conflict with Debts: The “practical benefit” rule has notably not been extended to the part-payment of debts (Foakes v Beer), creating an inconsistency where a promise to “pay more” for services is enforceable, but a promise to “accept less” of a debt is not.
Related Cases
- Stilk v Myrick (1809): During a voyage, two sailors deserted, and the captain promised the remaining crew that their wages would be shared among them if they worked the ship back to London; the claim failed because the sailors were already legally bound by their original contract to exert themselves to the utmost, [477–478].
- Hartley v Ponsonby (1857): In a situation similar to Stilk, nearly half the crew deserted, making the continued voyage exceptionally dangerous; the court held that the remaining sailors provided new consideration for a promise of extra pay because they were no longer legally bound to continue under such hazardous conditions.
- Foakes v Beer (1884): A creditor promised to waive her right to interest on a judgment debt if the debtor paid the principal sum in instalments; the House of Lords held that this promise was unenforceable because the debtor provided no consideration by simply paying a sum he was already legally bound to pay [510–511].
- Ward v Byham (1956): A father promised to pay the mother of his child £1 per week provided the child was “well looked after and happy”; the Court of Appeal found that the mother’s promise to keep the child happy provided a “practical benefit” to the father that constituted valid consideration, even though she had a legal duty to care for the child [463–464].
- Pao On v Lau Yiu Long (1980): The plaintiffs agreed to perform a pre-existing contractual obligation owed to a third party (an undertaking not to sell shares for a specific period) in exchange for an indemnity; the court held that a promise to perform a duty owed to a third party can be valid consideration [546–548].
- In re Selectmove Ltd (1995): A company in tax arrears proposed a repayment plan to a tax collector, who said he would “revert” if his superiors disagreed; the Court of Appeal refused to extend the Williams v Roffey “practical benefit” rule to the part-payment of debts, feeling bound by the House of Lords in Foakes v Beer [522–524].
- MWB Business Exchange Centres Ltd v Rock Advertising Ltd (2016): A licensee who had fallen behind on payments reached an oral agreement with the landlord to reschedule the debt; the court found this was supported by consideration because the landlord obtained a practical benefit “over and above” the mere payment of money by retaining the defendant as a tenant and avoiding the property lying empty [528–530].